US corn - first exports to Vietnam

18th July, 2006: Ho Chi Minh City, VIETNAM - US corn farmers have signed a deal to sell 5,000 tonnes of corn to Vietnam for the first time, with the shipment scheduled for July or August.

The export contract was signed in late June during an exploration the domestic market by representatives from the US Grains Council (USGC) and the US National Corn Growers Association.

The deal, although not large in volume, is meaningful for US corn producers, who have now made a breakthrough to access the market in Vietnam, chief representative of the US Grains Council in Vietnam, Tran Trong Chien, told Vietnam Investment Review.

The deal also opened opportunities for Vietnamese buyers, as they can now work directly with US partners, reducing expenses by cutting out intermediary agencies.

Lai Thieu Feed Mill in Binh Duong, the first US corn importer, has previously imported US distiller’s dried grains with solubles (DDGS) and soybean meal, and has sales of volume up to 30,000 tonnes each month.

Kimberly Rameker, USGC regional director in Southeast Asia, said: “The US is already supplying DDGS and corn gluten meal to feed millers and end users in both northern and southern Vietnam and would welcome the opportunity to supply corn to end users throughout the country.”

Domestic corn farmers currently produce three million tonnes each year, most of which finds its way into feed. In recent years, feed millers imported between 300,000-400,000 tonnes of corn per annum, mostly from China and Thailand, as local supply could not meet increasing demand.

Corn imports from China, however, gradually fell, due to demand from the Chinese feed producers. Vietnamese feed millers, therefore, had to look further afield for supply, and found US corn producers a good replacement because of their quality product.

Mike Callahan, USGC senior director of international operations, said that US export margins were not facing competition from China or Argentina, its original rivals in the Asian market, as China has retreated from the export market altogether, and is even importing some corn form the USGC.

Rameker said: “The US industry is well aware of current and future market potential in Vietnam and imported commodities from the US can compete with commodities from other origins.”

The USGC estimates that Vietnam’s demand for corn imports could grow by 8 per cent annually, and considers this first purchase as an important step toward capturing that demand as it develops.

USGC’s director of communications Cheri Johnson said that the continuing shift toward higher industrialisation of livestock production in Vietnam would create further demand for feed stuffs, which would continue to be imported.